5 Reasons clients fire their adviser!

At DISCUS HQ, we’re always interested in research, what is it telling us and whether it can drive changes in behaviour? The above headline is the title of a short research paper[1] from the US which grabbed our attention recently.

The study was undertaken with 1400 advisers in the US, where they disclosed the key explanations clients had given them for leaving their previous adviser – an interesting concept! The results were enlightening and as no-one likes to lose clients, we wondered if the survey would give the same results if it had been undertaken in the post Retail Distribution Review (RDR) environment here in the UK.

In reverse order, the 5 reasons were:

5) 23% said that their adviser made claims which they couldn’t deliver

Promoting value to clients based on the investment returns which can be generated always felt like challenging game to play. Based on our recent research with advisers, we believe that the majority of advisers in the UK now focus their proposition on financial planning and how they can help clients to achieve their financial goals. Clearly performance of investments contributes to this but is not the sole focus of adviser propositions.

4) 34% said the adviser’s investment performance was poor

This is a logical progression of the above point. If the client was led to believe that the value being delivered was based on a target that could be difficult to achieve (and generally out of the control of the adviser) then it’s hardly surprising that clients are unhappy if anything lower than their expectations is delivered. ‘Why am I not getting my returns?’ followed by ‘Why is the market beating my portfolio?’ when the market is looking up, is a lose-lose situation.

In a post RDR climate then perhaps the above two responses wouldn’t be as prevalent in the UK?

3) 44% said that the adviser failed to return their phone calls promptly

We all hate it when calls are not returned and the research suggests that the best way to tackle this is to prevent the calls in the first place by ‘coaching clients effectively’.

Inbound calls can’t be eradicated but analysis of phone call enquiries might identify a pattern of calls whereby some simple client communication could reduce them – these are often referred to as ‘failure demand’.

2) 51% said that the adviser failed to understand their goals and objectives

This one was definitely a surprise as most of the financial advisers we work with spend a significant amount of time understanding their clients’ requirements, financial goals and objectives. Usually this is supported by a cashflow report and a plan is developed to help the client to achieve these goals.

1) 72% said the adviser failed to communicate with them

So, the good news is that the number one reason why advisers get ‘fired’ is simple and easy to address. The implementation of a regular mechanism to communicate with clients should be easy by using a good quality CRM system but perhaps the real challenge is to ensure that the content is relevant and that it is delivered in an appropriate way for the client or client segment.

For example, a ‘one size fits all approach’ for client newsletters is only be suitable for businesses who look after clients with similar requirements.

The benefits of technology is that Ecommunications can be easily tailored to a range of clients based on the topics which may be relevant to them. Very few advisers appear to segment their client base when developing their contact strategy but digital communication should make that much easier.

In summary, we think that different responses might have emerged had the survey been undertaken in the UK – Let us know what you think.